Korea's Tax Agency to Withhold $70M From Crypto Exchange Bithumb

South Korea's National Tax Service will withhold tax worth 80.3 billion won, or $70 million, from the country's largest crypto exchange Bithumb.

CoinDesk Korea reported on Sunday that Vidente, the largest shareholder of Bithumb Holdings, which runs Bithumb Korea, confirmed the withheld amount in a notice and said the tax will be imposed on its foreign customers.

This is the first time that the country's taxation agency has imposed tax on gains from cryptocurrency transactions, the report said.

"Bithumb Korea is planning to take legal action against the tax claim so the final payment can be adjusted in the future," the notice said, according to a report by Korea JoongAng Daily on Monday.

The amount of tax, which will be likely paid by the exchange itself, was calculated based on the rate for miscellaneous income, i.e. irregular income like lottery gains, Korea Joongang Daily wrote.

The tax is collected at an annualized rate of 22 percent, based on the amount of foreign withdrawals from Bithumb.

Korea Joongang Daily cites an anonymous source at the exchange explaining that although the Korean government banned foreigners from opening accounts on crypto exchanges in December 2017, they still used the country's trading platforms.

Korea's Income Tax Act currently does not recognize cryptocurrency transactions as taxable events and there are no clear rules about taxing crypto in the country at this point.

Earlier in December, the country's Ministry of Economy and Finance said it would introduce specific regulations for taxing crypto in the coming year.

In 2018, South Korea banned anonymous crypto trading.